The Small Business Guide To eChecks

An eCheck allows a customer to pay a business electronically using money from a checking account.

Here’s how eChecks work, how they compare to other payment methods, and whether accepting them makes sense for your business.

What Is An eCheck?

An eCheck is an electronic payment made directly from a customer’s checking account. The customer provides their bank account information and authorizes the business to withdraw the payment, which is typically processed through the ACH network.

Businesses can accept eChecks for both one-time and recurring payments.

eChecks vs. ACH

An eCheck is generally an ACH debit used to collect a payment from a customer’s checking account.

ACH is the broader electronic bank-transfer system. It also handles transactions such as direct deposit, business-to-business payments, and transfers into bank accounts. In other words, eChecks are typically ACH payments, but not every ACH payment is an eCheck.

eCheck vs. Credit Cards

Because eChecks are processed through the ACH network instead of card networks, they typically cost less to accept than credit cards.

Other potential benefits include:

• Lower processing fees
• Fewer recurring-payment failures caused by expired or replaced cards
• Access to customers who prefer paying directly from a bank account
• An additional payment option for large or recurring transactions

However, eChecks take longer to process and are not guaranteed. Payments can fail because of insufficient funds, incorrect account information, or customer disputes.

How Do eChecks Work?

To pay by eCheck, a customer provides their bank routing and account numbers and authorizes the business to withdraw the payment.

The business submits the payment through its processor, which sends the debit through the ACH network. The customer’s bank then withdraws the funds and transfers them to the business’s account.

The process typically takes several business days, and the payment may still be returned if the account has insufficient funds or the customer disputes the transaction.

How Can Merchants Accept eChecks?

Businesses typically accept eChecks through a payment processor that supports ACH payments. Customers may enter their bank account information through:

• An online checkout page
• A payment link or electronic invoice
• A recurring billing form
• A virtual terminal for phone payments

Before initiating the payment, the business must obtain the customer’s authorization. The processor may also require the customer’s bank account to be verified.

Are eChecks Safe For Merchants?

eChecks can be a secure payment method when businesses use a reputable processor and follow proper authorization and account-verification procedures.

However, eCheck payments are not guaranteed. They can be returned because of insufficient funds, incorrect account information, closed accounts, or customer disputes. Businesses should review their processor’s fraud-prevention tools, return fees, dispute policies, and account-verification requirements before accepting eChecks.

How Much Do eChecks Cost?

eCheck processing fees vary by provider. Common pricing models include:

• A flat per-transaction fee
• A percentage of the payment amount
• A percentage fee with a maximum cap
• Monthly or gateway fees in addition to transaction fees

eChecks usually cost less to process than credit cards, especially for larger payments. However, businesses should also check for fees for returned payments, account verification, expedited processing, monthly minimums, or disputed transactions.

Compare the total cost, contract terms, processing times, and included features before choosing an eCheck provider.

What Businesses Benefit Most From eChecks?

eChecks work for businesses that collect recurring, invoice-based, or high-value payments, including:

• Subscription and membership businesses
• Professional service providers
• Property managers
• B2B companies
• Schools and nonprofit organizations
• Businesses that regularly send invoices

Because eChecks typically cost less to process than credit cards, they may be particularly valuable for larger transactions. However, approval and pricing depend on the provider, the business’s industry, processing history, and risk level.

Are eChecks Right For My Small Business?

eChecks may be worth offering if your business accepts recurring payments, sends large invoices, or wants a lower-cost alternative to credit cards. This includes subscription businesses, professional services, property managers, and B2B companies.

However, eChecks aren’t ideal for every transaction. Payments can take several business days to confirm and may be returned for insufficient funds or other issues. Businesses that rely on immediate payment confirmation may prefer credit cards or faster payment options.

To compare eChecks to other payment methods, check out our guides to real-time payments and wire transfers.